Barclays’ chief executive, Bob Diamond, is fighting to keep his job after the prime minister said accountability for the bank’s admission that it had manipulated key interest rates should go right to the top of the bank.

In a letter sent to Andrew Tyrie, chairman of the Treasury select committee, Diamond said the bank’s traders who had attempted to rig the rate for their own profit were guilty of “wholly inappropriate behaviour”. He said: “They were operating purely for their own benefit” but insisted the rates they had distorted had not had any impact on ordinary savers and mortgage borrowers. He also promised to claw back bonuses, withhold pay and fire those responsible for the scandal.

However, Diamond’s position will take yet another hit on Friday as the embattled bank is braced for the details of a new mis-selling scandal to be released.

David Cameron’s attack on Barclays – which incurred £290m of fines for its role in fixing rates that affect the cost at which millions of customers can borrow – came as the bank’s shares plunged 15%, wiping almost £4bn off the value of Barclays in its biggest one-day fall since March 2009.

“People have to take responsibility for the actions and show how they’re going to be accountable for these actions,” said Cameron. “It’s very important that goes all the way to the top of the organisation.”

The intervention by politicians, including the chancellor, George Osborne, who described the rate-fixing as “a shocking indictment of the culture at banks like Barclays”, came amid expectations of a criminal investigation and a potential bill for the banking industry that one analyst, Sandy Chen of Cenkos, warned could “run into the billions”.

The damage to Barclays’ reputation could result in the bank losing its status as premier member of Business in the Community, where Prince Charles is president. A spokeswoman explained that there was a formal removal process, which has not yet been implemented. She added: “The matter is being discussed internally, but it is too early to say whether Barclays membership of the organisation would be formally reviewed.”

Sharp falls in the share prices of the bailed-out Royal Bank of Scotland and Lloyds Banking Group evoked memories of the darkest days of the banking crisis as the potential scale of the interest rate-fixing scandal emerged and ahead of an announcement by the Financial Services Authority about the mis-selling of financial products to small businesses.

Barclays and RBS are expected to be at the centre of the City regulator’s warning that complex interest rates swaps were mis-sold to small businesses and that redress would need to be paid to thousands of out-of-pocket customers.

Barclays was fined for attempting to manipulate crucial interest rates known as the London interbank offered rate (Libor) and the Euro interbank offered rate (Euribor) between 2005 and 2009. They are benchmark rates that play a crucial role in determining the cost of borrowing for households and companies.

Osborne said there were “ongoing discussions” between the FSA and SFO and that he was looking for ways to direct the £59.5m fine levied on Barclays into the hands of taxpayers rather than back to the FSA. US regulators were responsible for the remaining £230m of fines. The regulators’ investigations uncovered a wave of damning emails in which Barclays staff were offered bottles of Bollinger champagne as payment or their names printed in “golden letters” for changing interest rates.

In an effort to demonstrate a willingness to clampdown on the City, Osborne promised he would unveil powers for criminal convictions at collapsed banks next week. Even though he made it clear that Barclays was not the only bank caught up in the manipulation of interest rates, he turned up the heat on Diamond.

“As far as the chief executive of Barclays is concerned, he has some very serious questions to answer today. What did he know and when did he know it? Who in the Barclays management was involved and who therefore should pay the price?” said Osborne.

Diamond has been summoned before the Treasury select committee, chaired by Tyrie, who said: “I fear it’s not going to be the end of the story, that we are going to find other banks have been involved.”

Among the others co-operating with an international investigation are HSBC, RBS, Lloyds and the Swiss bank UBS. They are among 15 banks that submit prices to the benchmark Libor rate.

The British Bankers Association said it was “shocked” at the findings of the FSA and and US authorities, and called for the government to take over the job.

In politically-charged language pointing the finger at Labour for lax regulation of the City during the period of the offences, the chancellor said the interest rate fixing was “evidence of systemic greed at the expense of financial integrity and stability” in 2005, 2006 and 2007. The

business secretary, Vince Cable, told the Business, Innovation and Skills committee that directors could be struck off “if the facts suggested action”.

Despite the clamour for a senior executive to take responsibility, executives were said to be determined to hold on to their jobs.

Shareholders appeared to be preparing the ground for the exit of the chairman, Marcus Agius. They want to meet the bank’s senior independent director, Sir Michael Rake, to discuss the reputational damage caused by the regulatory action. While the political attention is focused on Diamond, shareholders indicated that Agius could be the first to be forced out after an already turbulent relationship with investors caused by the row over Diamond’s £17m pay deal last year.

The National Association of Pension Funds also indicated its frustration with the bank. David Paterson, head of corporate governance, has asked the bank to claw back bonuses and other long-term incentive plans that cover the period of the rate fixing, but has yet to get a response.

The high pay of Diamond’s pay – who has taken home nearly £100m since 2006 – prompted the former chairman of Royal Bank of Scotland to tell the Today Programme that there were “very high expectations of him” in the light of the fines.

Although the FSA does not have powers to impose criminal sanctions for manipulating interest rates, leading lawyers said that the Barclays traders may have broken the law. Andrew Oldland QC, a former SFO prosecutor and now a partner at City law firm Michelmores, said: “It has got the potential for fraud. The key thing with fraud versus the regulatory rules is it requires proof of a dishonest intent and if the authorities think they can prove that the chances are they can select a whole host of charges.”